Google buys Facebook

In the wake of stories of falling stock prices and that Google is lagging behind in the race to dominate the social media arena, the search giant has sent shockwaves through the sector today with an announcement that it has made an offer for a controlling interest in FaceBook – currently the largest social media networks, and one of the fastest growing sites in the world. Last October Microsoft paid $240 million for a 1.6% stake in FaceBook in what was widely touted as a coup for Microsoft over Yahoo! and Google.

At the time Google Chief Executive Eric Schmidt kept the door open to a collaboration between Google and FaceBook. Until now Google’s own social networking application Orkut has only found true success in Brazil and commentators believe that Google, a veteran innovator, does not want to loose ground in the race to dominate Web 2.0 which has been described as a new operating system that exists on the web rather than in a computer. Traditional media companies are also vying for control with the News Corporation buying MySpace in 2005 but FaceBook has outstripped MySpace in terms of growth and advertising revenue so Google may now have decided to buy its way in instead of building its own application.